Search Legal•Info News:

Receive Current Legal•Info News Via RSS:

$13 Billion Settlement With JPMorgan

Posted: Wednesday, November 27th, 2013 at 12:43 pm

On November 19, an announcement was made by the United States Department of Justice (DOJ) that it had reached a final civil settlement worth $13 billion with JPMorgan & Co. The deal marks full resolution of all state and federal claims stemming from the banking giant’s questionable mortgage sector practices which many believe played a substantial role in the financial crisis of 2008.

The settlement represents the largest such agreement ever made by an individual company in this country. As part of the agreement, a statement of facts was placed into the record, in which JPMorgan acknowledges that its employees, as well as those of Washington Mutual and Bear Stearns, knew that mortgage loans at the time were not compliant with applicable rules and regulations, but were securitized and sold anyway without informing investors of the risk. Attorney General Eric Holder stated that this particular conduct laid the foundation for the meltdown of the mortgage market, the effects of which are still being felt.

While JPMorgan was certainly not alone in engaging in this type of market behavior and had lots of company in the bundling of risky loans for the purpose of selling them to unwitting investors, the DOJ asserts that this should not mitigate the extent of the penalty to be faced. According to the Justice Deparment, the massive scale of the settlement reached with JPMorgan ought to serve as a warning that the investigative process has not concluded and that accountability will be sought from the parties involved.

Despite the existence of the settlement agreement, JPMorgan and its employees individually could still be criminally liable for the actions forming the basis of the agreement. In addition, JPMorgan will be required to pay $4 billion in relief to consumers who were negatively impacted by the conduct at issue. This relief could come in the form of loan modifications, principal forgiveness and blight reduction efforts. Full compliance must be demonstrated by December 31 of 2017.

Governmental scrunity of JPMorgan does not end with this settlement, a fact made evident by the company’s August SEC filing in which it acknowledged being the subject of investigations by the criminal and civil divisions of the U.S. Attorney’s Office of the Eastern District of California. Though the mortgage meltdown is now several years in the rear view mirror, it is clear that the ramifications of the conduct that led to it will continue to accumulate.

Disclaimer

The information provided on LegalInfo.com is not legal advice and should not be interpreted as legal advice. You should consult with an attorney for individual advice regarding your legal issue. The entry of your information into the Free Case Evaluation form on this website does not create or form an attorney-client relationship or confidential relationship. Your access to and use of this site is subject to additional Terms and Conditions.